As promised last month here is the second instalment of the 25 top tips, thanks to our friends at Yellow Brick Road Wealth Management, on how to save money and pay off your home loan faster:
13. If you have higher cost debt; credit cards, personal loans or car loans, pay them off first – get rid of this type of debt as it’s costing you the most overall.
14. Pay off your non-tax deductible debt first. If you have an investment property or a loan for shares that you can claim a tax deduction for be sure to pay off your home loan first.
15. Negotiate, negotiate, negotiate – fees, rates, conditions, everything is open to discussions. If you can’t do it yourself think about engaging an expert to help you.
16. Beware the lure of low start or honeymoon rate offers where loans start cheap but can end up expensive when compared with general home loan rates available with comparative features after the initial honeymoon period.
17. Refinancing high rate borrowings – credit cards, personal loan, and car loans into a low rate home loan can provide you with an opportunity to reduce your total interest costs. Do make sure you don’t rake up that high cost debt again.
18. If you are lucky and you get a pay rise try to put as much as possible of the additional take home pay back into your home loan.
19. Do the same with any bonuses or sales commissions or extra work related incentives you might receive.
20. If you can make your first payment on the settlement date of your loan rather than one month after this as the contract normally requires you will get a month ahead even before you start.
21. Try to pay associated loan costs such as application fees, legal costs or home loan insurance costs from your own cash savings rather than loan adding them to your loan balance, avoiding the added interest on these costs associated with putting on the loan.
22. Avoid the all too easy option of borrowing “that extra $5,000” for little extras, it ends up costing you more than double.
23. Write down all your monthly expenses – it’s your budget. Then try to stick to it, cut back where you can. By putting it in writing you get a bit more accountable to the desired outcome.
24. Look for a loan that is portable, that can be moved to your next home with minimal costs, as your family grows and changes the house and home loan you need also changes. Make sure you plan for it.
25. Review your loan at least once a year with a qualified expert, all things change over time and it’s smart to stay on top of things.